Markets Stumble Into The Weekend

Overview: There is little reprieve from the equity meltdown ahead of the weekend. Major markets in the Asia-Pacific region, including Japan, China, India, and Australia pushed lower. The MSCI index of the region is near 15-month lows. The Dow Jones Stoxx 600 is off about 0.6% near midday in London to make new two-year lows. US shares are also trading lower in Europe. Bonds are not finding much love despite the continued sell-off in equities. This was evident in the US yesterday and in Asia and Europe, where benchmark yields are firmer. The dollar has stabilized against most of the major currencies today, though the yen and sterling are holding their own. The Dollar Index is off about 1% this week, which is what it gained last week.

Asia Pacific

Japan reported November CPI and the cabinet approved next year's draft budget, which includes extra stimulative measures to offset the retail sales tax hike next October. Headline CPI fell to 0.8% in November from a year ago. It was at 1.4% in October. The decline reflects mostly the drop in energy. The core rate, which excludes fresh food, slipped to 0.9% from 1.0%. Excluding both fresh food and energy, consumer prices are up 0.3% from a year ago, down from 0.4% in October. The JPY101.5 trillion (~$900 bln) budget increases spending on welfare, public works, and defense. The extra stimulus provided this year, including the new JPY3 trillion spending package, and next appears to be around JPY6.5 trillion to blunt the impact of the sales tax hike that is expected to raise JPY5.6 trillion.

Chinese officials seem increasingly concerned about its economy. They are preparing to offer a TLTRO facility like the ECB, it appears. Specifically, reports suggest the PBOC will build on the medium-term lending facility but offering lower cost liquidity for three years for funds lent to small companies. Many observers expect the PBOC to cut the required reserve ratios at least a couple of times next year. Chinese reports suggest tax cuts and fee reductions will also be rolled out in the coming months.

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Marc Chandler has been covering the global capital markets in one fashion or another for more than 25 years, working at economic consulting firms and global investment banks.

Chandler attended North Central College for undergraduate work, where he majored in political science and the humanities. He holds master's degrees from Northern Illinois University and the University of Pittsburgh in American History and International Political Economy. Currently, Chandler teaches at New York University Center for Global Affairs, where he is an associate professor.

A prolific writer and speaker he appears regularly in the press and has spoken for, and is an honorary fellow of, the Foreign Policy Association. In addition to being quoted in the financial press daily, Chandler has been published in the Financial Times, Foreign Affairs, and the Washington Post. In 2009, Chandler was named a Business Visionary by Forbes. In 2009, his book, Making Sense of the Dollar, was published by Bloomberg Press and received a Bronze Award from Independent Publishers. His second book, Political Economy of Tomorrow was published in 2017.

Though a Chicago native, and life-long Cubs fan, Chandler currently resides in New York City with his wife, Jeannine, and son, Nathan.

Unless otherwise stated, all the work listed on Marc Chandler's profile is his and credit should be given as such. Mr. Chandler assumes no responsibility for losses, monetary or otherwise, resulting from the publication of his work. For more information please contact Marc.